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Benjamin Lauzier: How Lyft fixed the hard side first

Through driver mentors, peer recruiting, and rental fleets, Lyft solved supply liquidity; quality demands guardrails over heavy-handed marketplace control.

Benjamin LauzierguestLenny Rachitskyhost
Sep 29, 20241h 24mWatch on YouTube ↗

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  1. 0:00 – 2:24

    Ben’s background

    1. BL

      I think when you're running a marketplace, you tend to sit in your ivory tower a little bit, looking at stats and thinking like, "If only we could get people to do X, it'd be better for- for everyone," right? I certainly, you know, did that in my career. I think, um, that's missing the point that we're humans, and I think sometimes we act in ways that are non-deterministic, uh, or counter-intuitive. But my take is I'm a huge believer in market forces and empowerment. So provide guardrails for what a good experience is in your marketplace, set a clear bar for quality, and provide the right coaching, uh, and tools for supply to be successful, and then take a step back and see where the gaps are and invest more in hands-on tactics just to close those gaps more specifically.

    2. LR

      (instrumental music) Today my guest is Ben Loiseau. Ben was VP of product and growth at Thumbtack, where he rebuilt the product team and Thumbtack's growth strategy, re-architected the revenue model, and helped 3X Thumbtack's growth within three years. Prior to Thumbtack, Ben was at Lyft for over six years where he was employee number 30 and led product and growth for the driver's side of the business, and at one point reached 1% of US workers driving for Lyft every month. He currently spends his time advising marketplace teams and founders, teaching Reforge course on marketplace growth, and most recently started a healthcare company called Noora that connects you to a care advocate to help you navigate the healthcare system in the US. In our conversation, we go many layers deep on the many key elements of building and scaling a marketplace business, including what to focus on pre product-market fit, how to know which side of the marketplace to prioritize, what product-market fit looks like, how to track liquidity, what causes most marketplaces to fail and how to avoid that, and a bunch of examples of really clever growth strategies, especially on the supply side, and some really interesting stories about how Lyft was able to compete with Uber early on with one-tenth of the resources. As a bonus, Ben also shares insights into how the European product market is different from the US product market and what he encourages European companies to change in order to operate more effectively and be more innovative. This episode is for anyone building or thinking about building a marketplace business. If you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcasting app or YouTube. It's the best way to avoid missing future episodes and it helps the podcast tremendously. With that, I bring you Ben Loiseau.

  2. 2:24 – 7:52

    Defining a marketplace

    1. LR

      (instrumental music) Ben, thank you so much for being here. Welcome to the podcast.

    2. BL

      Thank you so much. So good to be here. Thanks for having me.

    3. LR

      It's absolutely my pleasure. Okay, so you are one of the most knowledgeable and experienced product leaders in the world on building and scaling a marketplace company, and so I want to spend the bulk of our time talking about and essentially extracting as much wisdom out of your brain on how to build and scale a marketplace business so that founders and teams that are struggling with building their marketplace company or just thinking about building a marketplace business can save a lot of time and a lot of pain. Uh, how does that sound to you?

    4. BL

      That sounds amazing. That's a high bar, but I will try to live up to your expectations.

    5. LR

      I am confident we will hit that bar.

    6. BL

      (laughs)

    7. LR

      Let me start with just setting a little context, and for folks that aren't super familiar with what is a marketplace business, they hear this term marketplace company, uh, what's the simplest way to understand what makes a company a marketplace company and a marketplace business?

    8. BL

      I mean, like you mentioned, I love marketplaces. I think, uh, I've been building and scaling marketplaces for, you know, I think almost 15 years now, and-

    9. LR

      Wow.

    10. BL

      ... I feel like they add just such a fascinating dimension to the challenge that we work on as- as PMs. You know, it's this hi- hidden dimension that you get and uncover when you work on marketplaces. And I think on paper what makes a marketplace is pretty straightforward, right? It's two or more sides that are distinct, uh, you know, from one another and they provide value to each other, and then you have an intermediary, uh, trying to facilitate that exchange of value in the middle. Right? So that's pretty simple sort of explanation. I think in- in practice it's always a little bit more nuanced on the fringes, right? Uh, you have all those interesting dimensions like how involved is the intermediary defines how managed the marketplace is. So something like Craigslist is super hands-off, unmanaged, and something like Lyft starts to be more into the semi-managed where the platform significantly shapes the transaction and this exchange of value, right? So, um, I think that's how I see it, but there's als- all those sort of like fascinating, you know, variations of marketplaces, I guess.

    11. LR

      (instrumental music) This episode is brought to you by Eppo. Eppo is a next generation A/B testing and feature management platform built by alums of Airbnb and Snowflake for modern growth teams. Companies like Twitch, Miro, ClickUp, and DraftKings rely on Eppo to power their experiments. Experimentation is increasingly essential for driving growth and for understanding the performance of new features, and Eppo helps you increase experimentation velocity while unlocking rigorous deep analysis in a way that no other commercial tool does. When I was at Airbnb, one of the things that I loved most was our experimentation platform where I could set up experiments easily, troubleshoot issues, and analyze performance all on my own. Eppo does all that and more with advanced statistical methods that can help you shave weeks off experiment time, an accessible UI for diving deeper into performance, and out of the box reporting that helps you avoid annoying prolonged analytic cycles. Eppo also makes it easy for you to share experiment insights with your team, sparking new ideas for the A/B testing flywheel. Eppo powers experimentation across every use case, including product, growth, machine learning, monetization, and email marketing. Check out Eppo at GetEppo.com/Lenny and 10X your experiment velocity. That's GetE-P-P-O.com/Lenny. (instrumental music) This episode is brought to you by Paragon, the developer platform for building native customer-facing integrations with third-party apps. Are native integrations on your product roadmap, whether it's to ingest context from your users' external data and documents or to sync data and automate tasks across your users' other apps, integrations are mission critical for B2B software products today.But building these integrations in-house cost an average of three months of engineering according to the 2024 State of Integration Survey, which results in difficult roadmap trade-offs. This is why engineering teams at Copy.ai, AI21, and over 100 other B2B SaaS companies use Paragon so they can focus their efforts on core product features, not integrations. The result? They've shipped integrations seven times faster all while avoiding the never-ending maintenance that comes with rolling your own integrations. Visit useparagon.com/lenny to see how Paragon can help you accelerate your product's integration roadmap today and get $1,000 in credit on their pro and enterprise plans. That's useparagon.com. You've mentioned managed marketplaces and just how that becomes, uh, something marketplaces start to think about more. I want to get back to that 'cause that's a really important point. But just, just to even, uh, clarify this point, a key part of a marketplace is that the company doesn't own the supply, right? That's in a sense kind of what defines their marketplace versus they're just selling stuff.

    12. BL

      T- totally, yes. Yes. And I think again, like, you have companies that claim to be sort of, you know, f- managed marketplaces, I think depending on, like, how you want to look. Uh, you know, with investors perhaps you'll pick, like, one end goal or the other. But, um, that's where you get into, like, you know, sort of gray waters. Uh, but yeah, like, the, the, the marketplace implies this concept of two independent and, you know, supposedly autonomous, uh, parties, uh, that you sort of help connect and, and, uh, and, and provide this exchange of value for them.

    13. LR

      Awesome. Okay. So let's come back to that, 'cause that's a really important topic and it's something that every marketplace kind of trends towards or thinks about is just like, "We're gonna control the supply. We're gonna manage it. We're gonna-"

    14. BL

      Mm-hmm.

    15. LR

      "... maybe own it in the future." But let's get back

  3. 7:52 – 13:28

    Challenges in building a marketplace

    1. LR

      to that. So you work with a ton of marketplaces. You've built a bunch of marketplaces. What do you find is the biggest struggle to building a successful marketplace business, the most common problem people run into?

    2. BL

      I think there's two types of challenges, I guess. There's, uh, you know, when you're talking about creating a marketplace and then there's when you're talking about scaling a marketplace. For creating a marketplace, I see many founders that are pre-product-market fit, super eager to nerd out on marketplace dynamics. They're super excited to (laughs) launch a marketplace. Uh, we all are. Uh, and they want to talk about supply and demand. They wanna look at all kinds of ratios. They wanna... They show me economic papers, uh, and ask, like, "How could we apply this principle to my company?" Uh, and here my advice is generally always, "If you don't have product-market fit and if you don't have a good enough growth strategy for at least one side of your marketplace, just forget about all this marketplace stuff, right? Focus on this core exchange of value. Go deep with one side of the marketplace and see if you can rely on some crutch, some hack for the other side for the time being," right? And you see companies like, um, you know, Airbnb and Thumbtack doing this with Craigslist pretty early on to jumpstart their growth. There's just countless examples. But, you know, don't get distracted by, you know, this shiny and, and cool sort of intellectually challenging idea of working in a marketplace and nail the basics of your product-market fit, um, at first.

    3. LR

      So just to spend a little more time there to make this even more real. So you're saying that pre-product-market fit, before you find that anyone really wants what you're building, focus on figuring out a way to grow one side of the marketplace. So maybe just two quick follow-up questions. How do you know which side to focus on initially? And can you give an example, I think Thumbtack may be a good example of this, of how they did that?

    4. BL

      W- which side to focus on is, like... In... There's different approaches to this, but generally people will take the hardest side. And so if... You know, uh, for... I'll take the example of Thumbtack, um, because we're gonna talk about it. Uh, so Thumbtack is a home services marketplace to help you find plumbers, electricians. And, um, the sort of... The, the, the harder side there was, uh, uh, was demand. Like, there is... There's supply you can, like, sort of look for. You can open the Yellow Pages, you can, like, find plumbers somewhere. But the hardest question was, can we go out there and can we find people to, uh, you know, to... Who want to, uh, you know, do something in their house, who have, like, projects that need to be done, right? What is the core growth strategy for us to, to acquire those people, to find them? And what kind of retention can we create? Can we create a delightful experience for them, uh, you know, to come back to our platform and want us to take care of their home for them, right? Pick the hardest side is sort of my advice. Um, and then how some companies sort of do this, again, like, I think there's a, a lot of different ways to do this, but a common advice is find a way to jumpstart one side, right? Find a way to, like, hack one side. Uh, play one-player mode is, uh, what it's also, also called sometimes. But, you know, try to find a way to tap into existing channels that have one, uh, side of your marketplace already latent. Um, and so, uh, again, you have countless businesses that have been built off of Craigslist. Uh, I think, you know, Thumbtack was partially, like, one of them. Uh, and the idea was like, "Hey, like, we can find, you know, all those great pros on Thumbtack. We can... When we have someone who wants a job... Oh, you want your kitchen remodeled? We can, like, you know, behind the scenes go and post that job on Craigslist and then we'll bring on, like, you know, all the contractors who are, like, browsing Craigslist looking for a job," right? "We'll bring them to, to our platform." That's an example of, like, how... You know, that way you worry around the core. You w- worry about the core value proposition of can we get people to come back to the platform? Can we create this delightful exchange of value? Are people trusting us? Do we have the right checks in place to make sure that you are hiring the right person? Uh, what will make you come back? And once that's done, then you can focus around, how do I build a flywheel on the supply side and how do I manage and how do I make sure I have enough plumbers for, you know, per market or something like that.

    5. LR

      When you say the, uh, find the hard side, how do you find that? Any advice you can give founders and teams?

    6. BL

      I- in general, I would say it... Intuitively, like, the teams know. Like, especially the teams that are, like, in the weeds. Uh, they know. They know, like, "Well, hmm, yeah, we can get, you know, X, but what we really struggle with is getting students to look at this," right? That's sort of your sign.... and I think, um, sometimes it takes, you know, someone else to, like, make you think about it, to reflect like, "Actually yes, you're right. Like, this side is, is obvious. We know how to get it. We just don't have the right supply for it, and we don't know how, where to find the supply." Boom. That's, that's the side that you should be focused on. That then, you find a way to, like, outsource your demand, subsidize it, find some other way, and like focus on, on this side that you have no idea how to grow. Like, that's, that you should have a reliable growth strategy for, for this side.

    7. LR

      In my experience, it's almost always the supply side is what you need to work on because once you have awesome supply, people are gonna be really excited to tap it. Like Uber Drivers, Airbnb Homes, uh, professionals on Thumbtack. Is th- is that your experience too?

    8. BL

      Yes. I would say, um, supply is the hardest side, maybe like 80 to 90% of the time. Yeah. I totally agree, yeah. I was trying to think of, like, counter-examples but I can't think of one. I just know that there are... Yeah.

    9. LR

      There's one I know which is Rover, based on research I did ba- because it turned out it was really easy to find people who want to walk dogs and watch dogs for 50 bucks an hour or whatever.

    10. BL

      Mm-hmm.

    11. LR

      It was, like, a very easy value prop. And so that, they had a wait list. They had just like so many people. Also TaskRabbit is the one I know about where they had so many wanting to be Taskers, whatever they call them, Rabbits.

    12. BL

      I was gonna mention TaskRabbit as well. I heard, heard of that as well, yeah.

    13. LR

      Okay. And then,

  4. 13:28 – 15:57

    Methods for growing supply

    1. LR

      uh, you talked about there's a core part of figuring out how to grow that part, how to grow the hard part, generally the supply side. You shared a couple of examples. Are there any more, like, clever things you recall that you might be able to share of just ways people grew supply early on that could inspire people that are trying to figure this out right now?

    2. BL

      Yeah. I think there's a couple of, you know, uh, like, common, like, tactics I would say, like, pretty early on that, um, I think companies, like, rely on. So we've talked about jump-starting one side of the marketplace, uh, with, you know, like, AirBnB, with, uh, you know, Thumbtack and Lyft also leveraged job boards. Um, you have, um, uh, also a lot of companies like building, like, value added services, like, pretty early on as, like, a core way of retaining supply, like, pretty early on. Like, "Let's build, you know, a really compelling basket of value for this supply, and this is gonna be like the thing that, like, appeals to everyone." Uh, so, uh, you know, like, uh, OpenTable did this, like, really well with, like, all the restaurant services. Uh, other things that I've seen people use, like, really well early on or, uh, like, you know, converting your s- your supply into demand or demand into, like, supply, uh, pretty early on. So Lyft, we tried that. Uh, it actually didn't work at Lyft, uh, but I know, uh, other marketplaces have been, like, uh, pretty successful with, like, you know, with, with that. Um-

    3. LR

      Just, uh, just to make sure people understand that one, it's a really interesting one, is in the Lyft example would be convincing drivers to become riders, convincing riders to become drivers, and mostly the latter, convincing riders to become drivers.

    4. BL

      Yeah, exactly. In our case at Lyft early on, we were, you know, we, we had a wait list on the demand side because we just couldn't, uh, you know, onboard enough supply. And so we had this idea of, like, having a pop-up. Instead of saying, like, "No drivers available," it would be like, "Hey, sorry, all the drivers are taken. Do you want to, like... People are making 50 bucks an hour right now. Do you want to, like, hop in the car (laughs) and, and drive?" Uh, and we had, like, some conversions but it felt a little distracting to the overall experience and wasn't, like, a huge driver of, uh, of supply. But I know that for Uber, uh, it actually was. Um, I think they had, like, a, a non, like a relatively meaningful, uh, amount of supply coming from it and it's gone.

    5. LR

      Wow, how does that make you feel that Uber figured out a better way to approach this and made it work? That doesn't feel good.

    6. BL

      And it's a different audience. You would think that the Lyft sort of passenger and driver is sort of a more, uh, you know, likely to, like, flip back and forth between the two, um, um, I don't know. I don't know. I, um, yeah. I'll have to think about this one.

    7. LR

      Some cam at Uber outdid you guys, oh no.

    8. BL

      Th- Yes, on a couple of other things.

    9. LR

      Ah, interesting.

    10. BL

      And we outdid them on a few other things also.

    11. LR

      Okay, okay. (laughs) That's right.

    12. BL

      (laughs)

  5. 15:57 – 21:36

    Understanding marketplace liquidity

    1. BL

    2. LR

      So essentially what we've been spending some time on here is just when you're starting a marketplace, figure out which side you need to drive because that's what will unlock this opportunity. There's a hard thing that nobody's ever done before, and most of the time it's build a bunch of supply that nobody has done before, and there's all these tactics for how to do that. And all of this is, as you're coming back to kind of the main question to ask, so we've gone on this awesome tangent, is, uh, pre-product market fit. Before you even know this is a thing, spend time, most of the time building supply to see if demand, customers actually want this thing. Right?

    3. BL

      Exactly.

    4. LR

      Cool.

    5. BL

      And then I think there's a different set of challenges. I think another, like the other pitfall that I see, um, is... Uh, so pre-product market fit, people tend to be distracted by those marketplace dynamics, like we talked about, instead of doing what we just talked about. For companies that have some sort of scale and product market fit, to me the, the place where I see people getting tripped up most often is the concept of marketplace liquidity or how to manage the health of a marketplace. And to me, liquidity is how marketplaces win, right? It's, it's this measure of your ability to match buyers and sellers efficiently, right? It's, it's how quickly and efficiently people can find what they're looking for on your platform. So you can picture a Venn diagram. Uh, one circle is this is what supply wants to sell, and another circle is this is what demand wants to buy, and your liquidity, uh, is, you know, the overlap between those two circles, right? So for, let's take the example of Lyft or Uber 'cause we talked about them, you know, it might be for all the people who open the app with the intention to book a ride, how many of those actually turn into a ride, right? And this metric, um, liquidity, it's, it's a direct multiplier on the efficiency of your marketplace. It's literally at the center of your vision. It's why you exist as a marketplace, is to connect the two, right? And it's, it's also the ultimate engagement loop. The more supply you have, the more choice people have, the better the service is, the more likely it is that it turns into a transaction, and the more likely it is that they come back. Uh, and so it's really this incredible sort of circle and what I see is people sort of, you know, uh, missing how critical this component is in the marketplace, uh, struggle to define it for the business, and, uh, m- most importantly struggle to build, like, an actionable playbook against it. Like, okay, like, "How do I manage this? Okay, it's important, but, like, what do I do about it?" Basically.

    6. LR

      Is there a metric you recommend people specifically look at to understand liquidity?

    7. BL

      I think the metric that I like, uh, the most is sort of a, a predictor of liquidity. So your liquidity might be like, uh, it's typically a measure of, you know, demand utilization, right? Like, it might be, um, looking for, you know, like something on there. Maybe like how many of those searches with intent actually turn into a transaction, right? So it's your, your fill rate of your intentful demand typically. And that, that's really indicative of the net output of your marketplace.

    8. LR

      Mm-hmm.

    9. BL

      Um, and so that gives you a sense of like the, the health of your marketplace but it can be influenced by a whole bunch of different factors, right? So, if you think about, you know, for, uh, for Thumbtack, it can be influenced by if there's a snowstorm out there, if like the competition is like bidding, if ... There's a whole bunch of, you know, exogenous factors that come into play. And the metric that I think is slightly more actionable, um, is a little harder to define but so much more, you know, helpful in my opinion. It's what I call like a market health metric and this is basically ... Think of your proxy that is the best predictor of your liquidity. So I'll use the example of Lyft. You know, you have your liquidity is, you know, your demand utilization. It's, uh, you know, how many app opens turn into a ride and what predicts this, right? Like, what will predict you deciding to book a ride? Uh, for Lyft, uh, and for Uber, it was, uh, ETAs. Uh, so we knew that if we had, uh ... If the closest driver was at least three minutes away from, from you or closer, then y- we had hit a ceiling. You were more than like X person likely to, you know, to convert and book a ride. If it's more than three minutes, if it's five, then maybe you check an Uber, maybe you walk, maybe you take the bus. If it's two minutes, it doesn't make a big enough difference. You're just gonna book the ride anyway. Um, so find this sort of like threshold. Find this sort of predictor that tends to plateau, that correlates strongly with retention but with also like sort of the transaction happening, and that's the metric that you can predict. That's the metric that's so much more actionable for teams to work against. If you're a supply team now, you can think of, okay, I'm adding 100 suppliers into the platform. I want to know what, you know, uh, you know, if it's actually reducing ETAs in this case, or like I can look at correlations like this, uh, and, uh, you know, sort of, uh, uh, limiting some of the effect of those exhaustion factors that, that I mentioned.

    10. LR

      Awesome. So essentially, watch, uh, fill rate is the term that used that a lot of people love, which is just like people with intent converting. So the Airbnb example is exactly the way we did at Airbnb, is, uh, we, we looked at people that are searching with dates as intentful users, and then how many of them convert to booking. Uh, so that's basically what you're trying to get to. And well, your point here is that's kind of the output metric. That's like where you-

    11. BL

      Yeah.

    12. LR

      ... what you want to move. But in order to move it, there's something that is the biggest lever to moving fill rate, and in your experience, and I've seen this exact same thing, it's usually s- amount of supply. Do you have enough good supply? And so in the case of Lyft-

    13. BL

      Yeah.

    14. LR

      ... it's do you have enough cars? Do you have enough homes? Do you have enough kilometers on Thumbtack?

    15. BL

      Yeah. Exactly. exactly.

    16. LR

      And that's usually where you can actually impact fill rate. Sweet.

    17. BL

      Yeah. Exactly.

    18. LR

      And that becomes the goal of the team, that becomes the focus of the company basically, drive that up in all the little markets you're in, all the categories you're in.

    19. BL

      Exactly. Uh, yeah, completely.

  6. 21:36 – 24:10

    Identifying product-market fit in marketplaces

    1. BL

    2. LR

      Awesome. You mentioned this idea of product market fit and that things change. Pre-product market fit, post-pro- product market fit. Uh, classic question, I'm curious if you have any insights here, just like what is tells you that you've climbed that hill of product market fit, that you might have product market fit, or you definitely have product market fit in a marketplace?

    3. BL

      It, it's hard because to me, uh, the two are most independent. Maybe this is a, a hot take, but I feel like product market fit is independent of your marketplace dynamics. You might have like, you know, a great product and it provides amazing value to both sides, but you have yet to crack the, you know, the, the flywheel on the supply side for how to bring those people. You don't have the right, you know, product channel fit, for example, and so it ... This will have a massive impact on the dynamics of your marketplace. And so, to me, my answer would tend to be, uh, you know, like pretty, like classical. It would be like, you know, measure your product market fit the way you would for a normal company. So like, yeah, you know, I like the, uh ... It's a bit of a, an art more than science, but I like the, the classic, you know, like if we were to take this product away, you know, like, uh, you know, what percentage of users, uh, you know, would be like significantly, uh, you know, disappointed or have no other solution? Right? So questions like this, I think go to the heart of how valuable is your solution to users, and you can do this on the supply side and the demand side.

    4. LR

      Mm-hmm.

    5. BL

      Then here, more advice, my advice is typically like to consider that you have two product market fits essentially. You wanna make sure that you have like a compelling enough value proposition on both sides of the marketplace, and very often at the beginning, you find product market fit on the demand side, but you realize like it's not compelling enough, uh, for your suppliers because your margins are too high or something like that. Uh, so realizing that you have like both those things, but I think you can measure them in a way that's like relatively traditional, um, and that's independent of marketplace sort of dynamics.

    6. LR

      I love that. We actually just had Sean Ellis on the podcast talking about that exact survey-

    7. BL

      Oh, cool.

    8. LR

      ... uh, the Sean Ellis test of asking people how disappointed would you be if they left, if the product didn't exist. And, uh, I just love that you keep coming back to this point that I 100% agree with, that most of the challenges you have with the marketplace business are ... Like, 90% are the same challenges you'll have with a non-marketplace business-

    9. BL

      Mm-hmm.

    10. LR

      ... and people over-focus on, oh, I need to think of this like a marketplace and all the marketplace science behind all this stuff, and really it's all the same stuff every founder's dealing with. Product market fit-

    11. BL

      Yeah.

    12. LR

      ... except you have two sides of it. Uh, growth strategy, but you have two sides of it. So I love that you keep coming back to that.

  7. 24:10 – 27:20

    Evaluating marketplace business models

    1. LR

      Something that I definitely want to touch on is when people are thinking about starting a marketplace company, what are signals that a marketplace is a good model for the idea? Because I think a lot of people come into it and be like, "I want to build a marketplace. Oh, I'm going to connect these two sides. It's gonna be great."There's no, there's no marketplace in this business, in this vertical. What are signs that a marketplace dynamic and a, and a business model is right for an idea versus no, it's not?

    2. BL

      Hmm. No one ever say like, "Oh, I'm gonna build Airbnb for X," right? It's not something that people say.

    3. LR

      (laughs) Yeah.

    4. BL

      (laughs) Uh, I think, um, the sort of the signs that, that come to mind are one, high fragmentation. I think you want this long tail of buyers and sellers without a handful of big players controlling the market because this is where you can provide value by doing this job of aggregation, right? I think you also want a relatively uniform, uh, set of needs. Uh, that means that it can be like your supply can be commoditized to some extent. This is what's so tricky, by the way, about, um, you know, services, service marketplaces like Thumbtack because unlike eBay where sellers, you know, they just wanna sell very clear and distinct inventory, on Thumbtack, you have electricians who only want certain types of jobs, but they only want it if they're available that day. And they might take a job and cancel it because something better comes up, uh, and so this makes for like a very fuzzy definition of supply. And you have very, so like, you know, different set of needs. Like, one electrician wants something, the other one has a very different perception of the same unit of demand, right? And that, that makes it very, very difficult. So it's, it's feasible, but I would say that is not a compelling attribute for, uh, building a marketplace, so a relatively unique form sort of set of needs. And the last one I'd mention is, um, a high enough barrier, uh, in the matchmaking or the curation. Um, I think how hard it is for like people to find each other today, uh, and how much effort do they have to put in to vet each other, um, I think is another great sign. If it, the higher it is, like the bigger the opportunity, right? Because it means like you come in, implement the right processes to simplify this sort of like this, this exchange of value.

    5. LR

      Awesome. I'd love to know if there's any examples you can think of, of bad marketplace ideas that people have tried. But if, I'll summarize the three points you just made, which I love. So these are signs that this is a great opportunity for marketplace business, that there, there's a lot of fragmentation on both sides. There's not just like a small number of companies or customers on, on one side or the other because if there are, why do they need you? They'll just find... Like, there's five airlines or whatever, you know? You don't need like a marketplace to match with an airline. Uh, then two is there's uniform needs. The needs are basically consistent. Like, I just wanna stay in a home. I want a car to take me somewhere. I want a plumber. And then, uh, there's a barrier, there's complexity to the matchmaking and helping someone book the thing, work with them. Like, finding a car I imagine is like, "I'm not gonna just flag down a car," right? There's challenge there. "I'm not gonna just go and ask someone, 'Can I stay in your home?'" There's challenges there.

    6. BL

      Yeah. Exactly.

  8. 27:20 – 36:23

    Common pitfalls and failures in marketplaces

    1. BL

    2. LR

      Awesome. Are there any examples of companies you've seen that are just like, that will, that will never work as a marketplace? Or here's like a funny example of a marketplace that tried to be a marketplace and it's not? Okay.

    3. BL

      I don't have a, a great example of that, but I can give you so like a, a tangentially related example-

    4. LR

      Yeah.

    5. BL

      ... of a marketplace that, um, I don't wanna throw anyone under the bus. I, I, uh, respect the, so the company and the effort, um, but Sidecar, uh, at the time was another ride-sharing company, uh, competing with, uh, Lyft and Uber. And, um, uh, there's I'm sure a whole bunch of, uh, sort of lessons there. Uh, they ended up, um, uh, sort of closing. But I think one really interesting direction that they took pretty early on to differentiate themselves was, in my mind perhaps very naively, uh, a mistake. They decided to give complete control, um, to the user, uh, where as a user you had a whole bunch of filters. You could decide like, "I want a car that's, you know, at least like 2015 or newer. I want a driver that's at least like, you know, this or newer." And so I think the theory was, you know, sort of reasonable on paper. It was like, "Hey, let's give people like more control over it." You have those other players out there. You have Lyft and Uber and people, uh, you know, feel sort of forced in this like standardized experience. "We're gonna compete by giving you the choice. You get to decide the experience that you, uh, want." I think in reality it just fragments your marketplace like even further, right? And you have this like hyper-fragmentation, uh, of your marketplace, uh, and I think it hurt their, you know, their, their, their SLAs like quite drastically. If you think about ETA when you ask explicitly you're like, "Yeah, sure, I want a newer car." And you like slide it to like 2020 not realizing that like you just lost like 10 minutes because now like, you know, we had a great driver, but they have a Honda Civic from 2018 and it's, you know, not the special that you wanted. So, I think, uh, uh, you know, people who build marketplaces tend to want to give a lot of control to the users because this is what users, uh, want or this is what comes up oftentimes in user feedback. Like, "Oh, we have those two distinct group of users. Those ones, they really want new cars. Those ones, they don't want new cars," right? And so naturally you have a product team that builds the toggle to get the new cars. Uh, and I think the mistake is that you, uh, you know, uh, unknowingly fragment your supply in a way that has a much more meaningful impact on the health of your marketplace than, than you suspect.

    6. LR

      I think this is another awesome example of, uh, this... Like, don't over listen to users and do what you think is gonna be best for the business. And this is not even a marketplace-

    7. BL

      Yeah.

    8. LR

      ... uh, lesson. It's just generally you don't want to give users more options than they will need to be successful and happy. And like I think Sidecar did that 'cause they were trying to like differentiate from Lyft and Uber. They're like, "What can we do differently?" And they're like, "Oh, let's give people all these options." I think they even let, uh, drivers choose the price that they're offering the ride at, which made it extra complicated. They're like, "Oh my god, all these cars at different prices." But I, you know, I respect their attempt 'cause they were just the third wheel, no pun intended.

    9. BL

      It's, it's also like ironically it's, um, almost the, the opposite advice that I usually give to companies who struggle, uh, with, um, you know, market health. It's, you know, if you have like different verticals, like try if possible to like open up your supply wells. Like, your user is telling you like X but-... try to give them, like, something that is tangential to what you think they want because odds are that they, uh, are actually fine with it. There's this amazing example, um, from Thumbtack. It's the- the- the smoke machine example. Uh, so Thumbtack, uh, now they- they specialize a little bit more in home services but, um, a few years ago they were also doing a lot of events. So you had DJs, you had photographers, uh, and a lot of people were hiring for, uh, wedding DJs on the platform and one of the checkboxes was a smoke machine. And it turns out a lot of people are checking this. They're like, "Yeah. Hell yeah. I want a smoke machine at my wedding." And unknowingly to them, obviously, like, only 5% of our DJs had a smoke machine and so you would carve out, like, 95% of our supply. And if- when we talk to users, uh, they were like, "Oh, no. I don't care that much about the smoke machine. I didn't realize that, like, this was automatically going to, like, remove half of the supply." And so, uh, you know, work on ways to, like, make this sort of checkbox affect the ranking but not the actual filtering, uh, is a great example of, uh, how you can listen to your users, uh, and, you know, tweak the experience but, you know, uh, simplify their cognitive, uh, you know, load by knowing like, hey, we know you prefer a- a smoke machine, but we're intelligent enough to know that, like, it's probably not a deal breaker for you.

    10. LR

      I love that example. The other thing that I think is important to talk about briefly is when you're thinking about building a marketplace, a lot of times they fail because the business model just doesn't work. I think about a company like Cherry that tried to do Uber for car washes and in theory there's, like, a smart idea of I'm gonna just do on-demand car wash. The problem is no one's gonna pay what it costs to do that, to the, like, a car wash person shows up and washes your car.

    11. BL

      Yeah.

    12. LR

      I think cleaning is another example. There's also just like-

    13. BL

      Exact is another one that comes to mind.

    14. LR

      Oh, Exact, yeah. Where it's just, like- like, someone will come does stuff for you.

    15. BL

      Something, yeah.

    16. LR

      Yeah. (laughs) And so I guess is there anything you want to add there, just like, this is another reason your marketplace might fail? Maybe just let me expand on this question. Just what are the most reason- what are the most common reasons marketplaces fail in your experience? And- and I think it's important to say most marketplace ideas fail, just like most startup ideas fail.

    17. BL

      Most ideas, period, fail, I think.

    18. LR

      Most ideas, period, fail. Same, coming back to most of the things you're going to struggle with are the same things that every company struggles with outside of a marketplace.

    19. BL

      Yeah.

    20. LR

      So let me just ask is, maybe specifically within marketplaces or even just broadly, why are the- what are the biggest reasons that marketplaces fail?

    21. BL

      I think, uh, three things come to mind. One is this concept of liquidity that we've talked about, right? So you need to kick off this flywheel, you need to build enough of that sub-density within your marketplace and depending on the business, it can take a lot of time or money and without the right diagnostic framework, you can end up running out of both. Uh, and so it's like that's the thing one and I- I felt this at Lyft, I- I've seen this at other companies, this like rush, like, "Wow, we- we have to get to this point otherwise, like, we know it's kind of a losing battle until we have enough density for both sides to have a good enough experience." The other one that I see is, um, ignoring one side. Um, uh, so we talked about, like, you know, doing that when you're sort of early on, but I see, you know, a lot of, uh, larger companies operating for too long as one-sided businesses. Uh, you know, many large, you know, marketplaces only thinking about their demand side funnel. So they run ads, they get clicks, they turn those clicks into dollars and they try to get enough supplies that intuitively the experience is good enough for users and, uh, my advice is if you're doing this, you're missing out on half of your business. Um, and the trick is marketplaces are very laggy, so once your network effects start to die down, it turns into this moment of panic of, "Oh, shoot. We forgot about, you know, half of our users. We forgot that sellers are people too and they're all leaving and now we need to completely transform, you know, our product, uh, to- to save the ship and to create a compelling value proposition on their side." So that's the other thing that I see is businesses realizing that they are marketplaces with, like, true marketplace needs, like, too late in the game. Um, and the last one is, uh, quality. I think we talked a little bit about quality before but it doesn't mean that you always need to have the best quality in your marketplace but being a marketplace implies a level of curation, right? You need to be intentional about the quality that you aim to provide, um, and I think a lot of companies, uh, you know, don't have necessarily that int- intentionality and you have this constant push of, you know, supply. "If only we lower our bar a little bit, uh, you know, we could get, like, more supply, right?" And so until you end up, we've all experienced this at some point, you find like some e-commerce website you look for something and there is also like, "Oh my god. This looks super shitty because all the sellers don't- don't look that great," right? Uh, that's a quality problem, right? And so you need to be intentional about your quality and I think that's another area where, like, companies fail.

    22. LR

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  9. 36:23 – 42:26

    Managed marketplaces and quality control

    1. LR

      Kind of as a segue from that idea of quality, I want to talk about managed marketplaces, managed supply. So I think it- the reason quality is so- such an issue for marketplaces is because you do not own the supply and control the supply. Your marketplace, you're not just selling something-... quality is innately going to be a challenge. Airbnb doesn't own homes, Uber doesn't control employed drivers. They can't even legally tell them exactly what to do 'cause they're contractors. So quality is always this ongoing challenge with marketplaces. So there's always this push towards making it more of a managed marketplace. So we, like, give people a lot more instruction, maybe they sort of own some of the supply, maybe they invest a lot in training, all that kind of stuff. And, like, in a perfect world not in a... In, like, an idealized world, the quality will be best if you own it. But then you're no longer a marketplace, your business model sucks. So, I guess, just any thoughts on marketplaces that are considering becoming more managed. Any advice on when it makes sense to move towards that spectrum and how far to go?

    2. BL

      Yeah. I think when you're running a marketplace, you tend to sit in your ivory tower a little bit, looking at stats and thinking like, "If only we could get people to do X, it'd be better for everyone," right? I certainly, you know, did that, uh, in my career. I think, um, that's missing the point that we're humans, and I think sometimes we act in ways that are non-deterministic, uh, or counterintuitive. Um-

    3. LR

      Right.

    4. BL

      ... at... I'll mention another fintech example, but, like, we'd originally sell leads to pros like plumbers and electricians, and of those leads, obviously, only a fraction would turn into actual jobs and revenue for those pros. So, we also saw that those pros weren't always great at converting leads into jobs. And so naturally, we thought that we could provide a more consistent experience for customers and for pros by improving their ROI and selling bookings, right, uh, directly to those pros. It's a common sort of marketplace move going from, you know, some version of lead to a direct booking. Uh, and they did great. We knew we were going to increa- i- improve their ROI by, you know, something like 20% maybe, and we launched this and pros hated it. Uh, they hated it because they actually subconsciously, like, they liked the feel of the sale, right? They loved this contact with customer and they sometimes, like, completely overestimated their ability to close a customer. They were like, "You took all those, those phone calls, they kept me busy. I felt like I was, like, hustling, I was, like, about to close this customer." Uh, and so no matter what the data says, if you're like, "Oh, we increased their earnings by 20%," like, the, the pros don't feel this way and it's their right to, you know, to feel however they want. And we saw the same thing at Lyft when trying to, you know, make driver earnings less volatile. We had to, like, fight a lot of that perception and a lot of that peak-end effect. So my call-out here is, any attempt at control can be really tricky and backfire in ways that are unpredictable. Uh, you also touched on sort of employment classification, right? In the US when we talk about controlling supply, like, all the lawyers are like, "No, no, no, (laughs) that's not something that we do." Uh, because, you know, if you control your supply, then, uh, they're, you know, can be legally classified as employees and be entitled to a whole bunch of benefits. So, m- my take on this in general is, I'm a huge believer in... And it really depends on the type of company, I should say, obviously, um, but my take is I'm a huge believer in market forces and empowerment. So, provide guardrails for what a good experience is in your marketplace, set a clear bar for quality, and provide the right coaching, uh, and tools for supply to be successful, and then take a step back and see where the gaps are. And invest more in hands-on tactics, uh, you know, just to close those gaps more specifically, right? So, lots of, like, coaching tools at, you know, Lyft. Uber did it, like, most sort of, uh, marketplaces, like, provide some sort of coaching. You have, like, a review system perhaps, you have, like, stars for your, you know, sellers, um, you know, for s- sellers who fall below the threshold, then, like, coach them, provide them the right tools, the right guidance. What is the standard that you have on your marketplace and help them, you know, meet that bar? And, uh, for people who, like, fall in, you know, for the gaps that you have, then that's when you, you invest in, like, sort of more hands-on, uh, you know, sort of, uh, tools. And th- this is a great... This is one of the things that we did at Lyft also with the, the rental company that we spun up. I'm happy to tell you more about that if that's interesting.

    5. LR

      I'd love to hear about that. Before we hear that, is there any marketplace that has been very good at upleveling quality without becoming managed, that did this really well, that you can think of?

    6. BL

      Yeah. There's a talent marketplace called Toptal, um, and they are specialized in, uh, in this. They have a really high bar for, for quality. Uh, they claim to only have, like, sort of the top 1%, top 3% I believe, uh, you know, of, of talent out there. Uh, and, uh, they have, uh, a really amazing sort of, like, set of, of, of, uh, of checks and processes. Uh, there's, uh, this, um, sort of funny story, uh, from, from them but apparently they're, they're s- they advertise something like maybe like a 3%, uh, you know, sort of, uh, uh, pass rate, uh, for their talent. So they only, like, onboard, like, 3% of the people who apply. And allegedly, their, uh, actual pass rate is even lower than that, but they thought that if they actually advertise the actual number, it would sound fake. Uh, and so (laughs) they actually, like, they actually just say 3% because, like, 1% would sound like too ridiculous and-

    7. LR

      I love that.

    8. BL

      ... it would discredit sort of like, uh, their, uh, their talent. So, they're one company that does a tremendous amount of work for, uh, you know, vetting quality early on with a ton of, uh, you know, like, uh, different checks, but also maintaining that quality, so throughout with the right coaching tools, with, um, you know, education and things like that.

    9. LR

      That's a really good example. And so basically they just vet and only approve high-quality supply in their case. It's mostly engineers, right, I think, on Toptal?

    10. BL

      Correct. Yes. It's mostly engineers and designers, I think.

    11. LR

      Which you can only do if you have so much supply that has so much interest in becoming part of your platform. But that's a really cool example. Basically, it's just, like, only allow

  10. 42:26 – 46:35

    Lyft’s rental car initiative

    1. LR

      really high-quality supply. Let's hear this rental car story. So this is, uh, Lyft trying to do rental cars, right?

    2. BL

      Correct. Yes, yes. Yeah, so this is, um... A little bit of context. I, uh, was leading the driver side of the product at Lyft and General Motors had invested half a billion dollars in our last round of funding. And this is Christmas Eve, I'll always remember. Uh, I got a call from, uh, Lyft's CEO, uh, and General Motors' CTO, and we decided to build a rental company, uh, essentially. And the, the reason for it was really fascinating.... GM had all those vehicles that were coming off of lease, and, uh, that they were forced to sell at auctions. Uh, they didn't really know what to do with. Um, and from our perspective, we had this massive supply gap. We've talked about this before. But we had this huge supply crunch. We, you know, were growing super fast and couldn't hire drivers fast enough, couldn't onboard drivers fast enough. Um, and when we looked at the market, we realized that 50% of the job seekers and welfare recipients, uh, don't ha- in the US, don't have a car, right? So, that was like... that was our supply gap. This was a huge pool of people that we just couldn't tap into because they didn't have a car. And so by renting cars, we could essentially manufacture our own supply, right? We could dial this up and down. We could be very surgical about, like, how many vehicles do we bring in? Which markets do we bring this in? At what price, right? We could even o- uh, you know, offer to pay for the car if they drove 30 hours a week, um, and completely transform the lives of those people, right? Now, we allow them to have true mobility. They can go buy groceries, they can go take the kids on vacation. Uh, so a huge win-win for, for everybody, uh, you know, with, with something like this. And, um, I think in, in three months, we'd built, you know, a rental company from the ground up. And within 18 months, I think we were, like, the fourth largest rental fleet in the US.

    3. LR

      Hmm.

    4. BL

      Uh, and, uh... but all this sort of stemmed from, like, this gap that, that we saw. Like, okay, like it's, it's not about, like, controlling, like, the drivers in general. It's about, like, okay, we wanna be surgical. We wanna control, like, the quality of the cars on the platform. So, we talked about that. That's a great example. In the markets where we thought the vehicles of quality was too low, we knew we could onboard, like, more rental vehicles, uh, you know, that were, like, more recent, uh, to, like, raise the average sort of like, uh, you know, age of a vehicle on the platform. So, it gave us more control, uh, you know, by... you know, in a much more surgical way, I guess.

    5. LR

      So, it's not that you are launching a rental car service. The idea was add supply and give drivers a car so that they could become drivers.

    6. BL

      I- i- it was, uh, a bit of both. We actually launched like a... it- it was, um, uh... we, uh, had vehicles that, uh, drivers could rent, uh, from-

    7. LR

      Yeah.

    8. BL

      ... from Lyft and, uh, to drive, uh, on the platform-

    9. LR

      Yeah.

    10. BL

      ... and also to drive for their personal needs essentially. But - but yeah.

    11. LR

      Got it. Okay, and then, uh, did this actually work and have impact? Was this a good idea?

    12. BL

      Yeah.

    13. LR

      Okay.

    14. BL

      Yeah, yeah. It had, uh, had a tremendous impact. Uh, like I mentioned, I think we scaled this, uh, sort of exponentially to become, uh, I think, uh, again, like, the fourth-largest rental fleet in the US, um, because it was- uh, you know, it was so effective for us, both because we had the right amount of control, but also, um, those drivers were incredibly loyal to us. Uh, we had a whole bunch of other incentives, uh, that we could do.

    15. LR

      Mm-hmm.

    16. BL

      We could offer to pay for the car, um, but only if you don't drive for the competition, for Uber... uh, for Uber, uh, and only if you drive at least like 30 hours a week. Uh, so this again, like, provided us with, uh, you know, again, like, much greater retention, much higher, so like engagement, uh, and, uh, was a real incentive for, for us, but also for, for the drivers.

    17. LR

      Awesome. And maybe the reason that's most interesting is this is along the spectrum of a managed marketplace. It moves closer to, like, you guys sort of like are paying and covering costs of cars. It makes it less just like this simple, uh, highly efficient marketplace.

    18. BL

      Exactly, yeah. It's the marketplace version of, you know, maybe like your, like, black car fleet owner has like their fleet of vehicle and they have, like, people. So, i- this was like the- the marketplace version of- of doing that.

    19. LR

      And it's also just a differentiator because GM and you guys were close, and so you had this lever that other... let's say that Uber didn't have. Amazing.

  11. 46:35 – 51:21

    Mentorship and ambassador programs

    1. LR

      Another, uh, area that I know you spent time on that I think is really interesting, and I think it'd be helpful to people to hear is the mentorship program and kind of the ambassador program that you had at Lyft, and how that helped you scale much more quickly than other folks were able to. Can you share that story?

    2. BL

      Pretty early on at Lyft, this was 2014, 2015 maybe, um, Uber was basically like 30X our size. Uh, they had 30 times more revenue, more people, more liquidity, like everything you can think of, right? They were growing like crazy. And we had a bit of this existential moment, as you can imagine, where we were wondering how we're supposed to compete with- with that, right? Uh, and we had to be, like, super clever. Everything that you did at the company had to be 10 times more efficient, like per person, than the competition just to survive. Like, that was- that was the bar, just not to die, and, uh put a lot of pressure on us. But, uh, we basically found kind of a clever way of onboarding driver, uh, drivers at a fraction of the- the cost and resources. Um, so let me give you a little bit of context on how the onboarding flow worked. So, at the time, the last step to get onboarded as a driver was, after your background check and your driving record check came back, um, you had to do a visual inspection of your car, a quick test drive, some light training, and we would check your documents. We would check that like you are the person with a driver's license and all those things. And Uber at the time would launch a team on the ground. They would go and open an office, and they would have DMV style group onboarding sessions and car inspections. And we did this as well in our first sort of like three to four markets. But you can imagine the- the overhead, right, and the lead time. You had to go and you had to find office space, sign a lease, hire employees. We had like huge, huge lead time. And we thought about it then, at the time, a huge competitive differentiator for us was our brand. As a passenger or as a driver, why would you use a platform, uh, with lower liquidity? As a driver, you have lower earnings guaranteed. As a passenger, you have like longer wait times. W- why would you use a service like that? Um, you do because of the brand, right? Because of its values. It's how it makes you feel. And- and so we had, you know, the pink mustaches at the time. We had like this like very, so like strong brand identity. I think a lot of that has been lost now. But-We also had this amazing community of drivers who were fierce advocates for the brand. And so what we did is leveraging this community and building, uh, essentially a self-onboarding supply engine where we would pay our best drivers, uh, $35 per mentor session. And, uh, a mentor session was essentially replacing this onboarding flow. So it was basically another driver looking at your vehicle. Uh, they'd check all your documents, take photos of your driver's license and all that stuff, and take you on a short ride along. And the benefits of this were absolutely mind-blowing and, uh, uh, you know, kind of unexpected for us on, on all sides. First, the, the mentors were our very best drivers and they were evangelists for the brand, right? So what they did was they would share, like, personal tips on when and where to drive, right? Oftentimes, they'd share their contact info. And this created some tremendous leverage and social proof for those new drivers who were on the fence about taking strangers into the car. It's actually quite funny because we had the brightest minds in the company, like, writing the best marketing emails and copy like, "Hey," like, "drive on Li- on, you know, hop on the car and drive this Saturday." And you had all those drivers, like, all those mentors saying like, "No, no, don't listen to the, those Lyft guys. Like, here's what you should do. Like, go, uh, you know, on Tuesday at 2:00 PM, text me, I'll tell you where the good spot is, uh, and this is, like, how you're gonna get rides, this is how you're gonna get rich and make a lot of money," right? And this recognition lever was just so much more powerful than anything we could be telling you, right? Um, and so very, very sort of, like, efficient activation lever for the new drivers. For us also, very, you know, like, incredibly scalable, right? We could fly a small team, uh, to rigorously vet and onboard maybe, like, t- 10, 20 top drivers, and then they'd fly to a different market and we would let the rest of our drivers be onboarded by those mentors. And even for those mentors, for those, like, top drivers, it was an incredible recognition lever. For them, if you were, like, a 4.9 driver, you had enough rides, you knew you had a chance to make it into being a mentor, and this provided additional earnings opportunity for you. If you did two mentor sessions in an hour, you could make 70 bucks an hour. Uh, you could take a break from driving if you're tired and do some of those. It felt like getting promoted at a job, right? And so it actually had a huge impact on the retention of our very best drivers, which was, you know, kind of unexpected. So, a lot of, like, really, really interesting benefits and we actually leaned into this and built, like, a couple of really fascinating variations of this, uh, you know, for a while. But, uh, this, this allowed us to match most of Uber's footprint with, like, you know, a tenth or a twentieth of the, the resources that, uh, you know, at, at, uh, incredible speed I guess.

  12. 51:21 – 54:12

    Driver recruitment strategies

    1. BL

    2. LR

      That is an amazing story and it's such a great lever that I totally agree, I don't hear people using and I wonder why. So what I'm hearing is it was cheaper, the drivers were making money. I imagine the drivers trained by the mentors ended up being better drivers. That's what we saw at Airbnb. Hosts that came in through a referral ended up being better hosts for whatever reason. And you're saying basically this is what allowed you to compete with Uber at a much smaller scale and, and much less, uh, money raised.

    3. BL

      Yeah.

    4. LR

      Amazing.

    5. BL

      Exactly.

    6. LR

      You said there's, like, a couple variations of it. Is there anything interesting there to share or just, like, things that you built as a follow-up based on the success?

    7. BL

      So, like, the next, uh, step in that journey was basically, um, we, uh, were growing like crazy, but now we had, we had cracked, like, the, the activation phase, but now we had a whole bunch of people, like, dropping off in the funnel, like, before activation, like, so they didn't enter their SSN or they didn't enter, like, the right info for us to run, like, all those checks in the previous steps of the onboarding flow. And so we built a team of, you know, hundreds of account executives and their job was just to, like, pick up the phone and, like, call those drivers. And so we had the same, you know, aha moment where, like, could we get, you know, some of our best drivers (laughs) to, to do that for us and empower them to, like, you know, to, to be a part of this. And so, uh, we did this and we launched, like, another, like, sort of role with, we called them recruiters. And so as a recruiter, as a driver, you could just, like, if this was quiet, uh, you know, on the road, you could just, like, hop on your phone and you would have, like, a mini sales dashboard where you could, like, claim leads. And this was, like, a driver who had dropped off in the funnel and you had, like, a 20 number, you could, like, just call them and text them. And same thing, those guys were outperforming our very best, like, trained salespeople.

    8. LR

      Oh, yeah. That's amazing.

    9. BL

      Because it's not like, "Hey, it's Ben from Lyft. Like, hop on the road please." It's like, "Hey, my name is, like, you know, James, and I'm a fellow driver as well. Like, Lyft told me that you have a complete application. Like, do you have any questions? Do you want me to, like, come to your house where we can do this together?" And, and we would pay them 20 bucks, uh, you know, per person that they, like, converted to activation. Uh, and so something, like, incredibly scalable for us, another, uh, way for us to, uh, to reward and recognize, like, our best drivers. And it also provided, like, a really interesting way for us to, like, smooth out the supply and demand. The problem with a marketplace like Lyft is that you have, like, this big spike, sort of like everyone wants to drive on a Tuesday at 2:00 PM, but everyone wants rides, uh, you know, on a Saturday at 2:00 AM, right? And so, how can you manufacture demand, uh, you know, like, during those low utilization times? This was a great way to do that. Now, you could, like, you know, wait on the road and, like, still make money, uh, you know, while just sitting in your car while waiting for the next ride. So this was another sort of iteration of this model that was, like, really cool.

    10. LR

      Amazing. That is so cool. I just, I just know, like, the feeling of having... of, uh, being on a team, (laughs) like, coming up with this idea and thing working must feel so great. Just like, "Holy shit, look at this." (laughs) "Look at all these cool things that we can do with our supply."

  13. 54:12 – 59:24

    Lyft vs. Uber: a strategic analysis

    1. LR

      Something I wasn't gonna get into, but I, it might be interesting just to hear if you have thoughts on this. So, um, looking at... So, I've been a huge fan of Lyft from the beginning. I used Lyft the very first weekend it came out in San Francisco when there was, like, five drivers. It was, like, a beta test. I was friends with someone that worked at Lyft early on and it was just, like, "Man, Lyft's the best." I was, like, all Lyft. Uber sucks. I hate that. I want... I wanna give it the fist bump, with the mustache, so great. Today though, I was just looking at market caps. So Uber is worth $150 billion. Lyft is worth $5 billion. I'm curious if you have thoughts on just... Like, it feels like Uber has won at this point and I don't know where Lyft goes. I know you've, your heart is with Lyft and you worked at Lyft for a long time. I know it's not, uh, it doesn't feel great to see how things have played out necessarily-I'm curious just to hear your take on just, like, why do you... What do you think Uber did, if you look back, that allowed them to s- basically win, and wh- where do you think Lyft goes from here? What do you think happens with Lyft? Like, they're still worth five billion. It's still a huge, amazing, successful business.

    2. BL

      Yeah.

    3. LR

      But just where do you think things go?

    4. BL

      Yeah. I think, um, it all went south when I left the company.

    5. LR

      (laughs)

    6. BL

      I'm just kidding. (laughs) Uh, no, I... And again, I have to, uh, uh, I have to call out the fact that I haven't been close to, like, sort of Lyft and, you know, their, their business and strategy for, you know, like, many years at this point. So, uh, take this with a grain of salt. This is my very naive perspective. But, um, I think, um, uh, to me perhaps, like, the biggest blow to, uh, Lyft's business was, uh, somewhat inherent, like the vision. Lyft's vision was always anchored around, like, transportation, people transportation. The founders were deeply passionate about, like, moving people. They were passionate about transforming the way people, you know, uh, move around in a city. They wanted to just change, like, how cities are designed, how roads are designed. Um, and so that meant, uh, you know, investing in, like, dynamic, uh, you know, uh, uh, uh, like, shuttles and, and things like that. And there's a lot of experimentations that went to that. But it also meant that Lyft never invested in things like food delivery or, like, goods and parcels and, and, and things like that. And I think, uh, that crushed them during COVID essentially. Um, uh, I think, um, uh, Uber had... I think at some point, like, their sort of, like, slogan was, uh, you know, moving in, like, bits and, and atoms or something like that. But I think it implies this, you know, this, this, uh, notion of, uh, being a... like, a logistics platform for, like, s- you know, assets, uh, in the world, right? For transporting people, for transporting things, uh, for transporting, like... Uh, and I think, um, uh, they built, they invested a lot in, like, you know, uh, trucks and, you know, food delivery and, like, all those, like, really exotic things, uh, that Lyft had never any intention to invest in. Not even because of the lack of resources, but because this was, like, in part, like, a distraction from, from our vision. We wanted to change, like, how people, like, move around in cities. We want to reinvent, like, public transportation, but we did not want to, you know, be a DoorDash competitor and help you get in donuts during COVID. And a hu- huge part of it also was, you know, leaning heavily in, like, shared rides. Uh, and so, like, this was like, you know, again, how do you reinvent public transportation? It's like every car is a dynamic bus, uh, and now, like, there's no bus line. The bus line is, like, always running, right? It's always, like, by your house. So, a lot of our investment, I think, and thinking went in, like, that direction. And the last thing that people wanted with COVID was to be in a car with, like, five strangers. (laughs) And, uh... But what people wanted is, like, food delivered to the house, right? And so, uh, that's sort of a... I know that the business, like, you know, had a huge blow during COVID, whereas I think Uber was able to, like, rebound much more quickly because of how diversified the business was. And so, uh, it's funny now because I think Lyft actually killed, uh, shared rides, which was just so core to their identity.

    7. LR

      Oh, wow.

    8. BL

      They were, like, the first ones to, like-

    9. LR

      I didn't know that.

    10. BL

      ... launch this. And so, um, uh, yeah, the new CEO, I think, uh, killed the shared rides, uh, which I'm really sad about. Um, but yeah. So I think it indicates, like, a very different vision now, a very different, like, direction for the business. Uh, and, um, yeah. That's my take, I guess.

    11. LR

      Interesting. So essentially, COVID really F'd them because their strategy was always about transportation. And when nobody needs a ride and act-... people want food, uh, strategically-

    12. BL

      Yeah.

    13. LR

      ... Uber made a really good move expanding into food delivery, which I think was a bigger business than rides for a long time. I don't know where it's at today-

    14. BL

      Yeah.

    15. LR

      ... for Uber.

    16. BL

      Yeah.

    17. LR

      And Lyft didn't have that, and-

    18. BL

      Crazy.

    19. LR

      ... it's hard to recover from a time like that. So it s- sounds like it's a combination of strategy was pointing Lyft in a certain direction and circumstances in the world just, like-

    20. BL

      Yeah.

    21. LR

      ... me- made it extremely hard.

    22. BL

      And losing me.

    23. LR

      And losing Ben. I'm looking-

    24. BL

      Yeah.

    25. LR

      ... at the... Uh, so you left in 2019. March 2019. And is that when they went public?

    26. BL

      After the IPO.

    27. LR

      Yeah.

    28. BL

      Yeah.

    29. LR

      And it's, like, all downhill from then. Uh, and then-

    30. BL

      I'm telling you.

  14. 59:24 – 1:10:30

    Cultural differences in tech: Europe vs. U.S.

    1. LR

      Um-

    2. BL

      No, no. I'm kidding.

    3. LR

      Okay. So there's two more things I want to spend a little time on before we close up. Uh, one is you... You're working Europe, so you're a product lea- leader in Europe, and I want to hear a little bit about what it's like to be a product person in Europe. And then, two, I want to hear about the startup. So at this point, no one can actually fire you. You have your own company that you're running. And I want to spend a little time here. Usually we don't spend time on this sort of stuff, but you're sch- working on something very cool that I think is gonna be really helpful to a lot of people in a really meaningful way. So I want to spend a little time there. So, but before that, so you... You're living in France now. You... Before you started your company, you were interviewing for CPO roles in France. You worked with a lot of French companies, European companies. I'm curious what you've noticed might be different in the cultures of tech companies in France and Europe in general versus the US.

    4. BL

      It, it's been really fascinating. Uh, I think... So my, my entire career has been in the US, uh, and I'm just trying to understand sort of like what that, that European and the French market in particular sort of, like, looks like. And, um, my, my read so far is, uh, that product management has really exploded, I think, in Europe in, in recent years. But the market dynamics are, uh, are still quite different. In the US, I think you have this inherently very liquid and dynamic market. Um, I think... This is my interpretation of it, but I think it leads to greater ownership and accountability for people and product at all levels. So, um, you know, product managers and leaders, they join a startup and, uh, you know, you're immediately in charge of a relatively meaningful piece of the business, uh, with genuine autonomy oftentimes, right?... doesn't always happen but, you know, uh, uh, oftentimes, I think, uh, that's the case. And if things don't work out well, you know, there's this expectation that you'll be managed out. Uh, this is just ... There are countless memes on LinkedIn about the tenure of CPOs at, you know, tech companies, uh, to illustrate that. I think in France, the, the market is just much less liquid, uh, so it's incredibly difficult to change jobs and it's very expensive to fire someone in France. So it seems to lead to two effects beyond the, the obvious job security. Um, one is, I think PMs tend to have less autonomy and ownership, uh, and a little bit more, like, micromanagement. And there are also less business owners, uh, uh, than they can be in the US, uh, and I see, like, sort of founders and managers starting to let go of control a little bit more, again, because you ... You know, I ... It's understandable in a way, you, you don't have like as much sort of, uh, control also as, as you do in the US. Uh, and so it leads to a lot of, like, really fascinating sort of effects. You have startups who tend to wait a little bit longer before hiring, especially product. Uh, the, the art of product is a little bit less of a thing. You have a lot of amazing PMs in France, but the recognition of, of the craft, uh, is, you know, uh, is a little bit different outside of the people who practice it. Uh, and you have a lot of, you know, real interesting outsourcing also. You have ... You see startups and companies of all sizes actually relying on great product studios like Modza to build end-to-end products from the ground up, right? So, uh, something that's been, uh, sort of, um, really, really interesting. Um, another side that I see is, you know, this, like, uh, dominance of business, uh, over tech in France. Uh, there isn't as much of a, you know, cult of technology and software engineering in France as there is in the US. And so the, the French Ivy League schools are business schools, like HEC, and the most highly valuable skill that you get is soft skills around management and business. It's ... You know, it differs from, like, the, the stereotype of the, you know, CS degree, Stanford dropout, uh, you know, that you have in, in sort of Silicon Valley. Um, and I think because of a few of those things that, that I just mentioned, less liquid, you know, job market but also, like, less liquid financial markets, the last thing that I've observed that's kind of interesting is, you know, that's also around ownership, I guess, is, like, equity is much less meaningful, uh, in France. Uh, so of the product leaders that I talk to, you know, most of them consider their equity to be, like, virtually worthless. Uh, none of them know of anyone who's made a down payment on a house, uh, thanks to their sort of equity. So it's seen as, like, a nice bonus, but it's not the token of ownership and the, the, the promise of future wealth that it can be in the US when you join, you know, a, a startup. For, for exact roles, I think it's often, like, sub-10% of their total compensation, uh, whereas, you know, in the US, it's very often, like, more than 50% of your compensation will be, will be equity. So, um, that's been kind of interesting in terms of, like, the, the dynamic, but it's also been real interesting to just see, like, how vibrant the start culture is here in France. You have, like, truly exciting innovation happening, especially in AI. Uh, you have a lot of, like, French companies at the forefront of this with, like, Mistral AI and Hugging Face and things like that. And, and also how, how ... It's been exciting to see how the government is leaning into that, uh, as kind of a catalyst for this innovation. I think the French government has dedicated something like, uh, $2.5 billion in funding to support French AI excellence by 2030, so, uh, they're running a lot of internal government incubators to try to disrupt some of the, you know, uh, government functions from the inside, and they're hiring, like, top talents to do that. Uh, it's ... I've met some of the people working on this. It's just really fascinating. It's ... It makes me super excited about, you know, what a federal startup tasked with reinventing the DMV would look like. Uh, so, uh, yeah, it's been really, really exciting to, like, see sort of, like, the, the, the whole space and how it, it differs from the US.

    5. LR

      Fascinating. Do you ... So I know there's also, like, AI regulation that feels really strange in Europe, but I think that's EU-based, right? Not, like, France specifically.

    6. BL

      Yeah.

    7. LR

      Yeah, that people are tr- are, like, not excited about. There's just, like, a lot of fear of AI, and so there's a lot of, uh, regulation talk in Europe.

    8. BL

      I know. I'm a big Android guy, and I, I ... A lot of the, uh, features like Gemini and all this, like, is only available in the US. And then, now that I'm in France, I, I, I see the difference a little bit.

    9. LR

      Interesting. Uh, so the, the cultural differences you spoke of, do you think they're rooted in the s- in the fact that people don't move jobs often? Like, what do you ... Or, or is it, like, culture, people just don't learn to work in the way that people learn to work in the US in ter- in the product role? Like, what do you think is the root of why things are so different?

    10. BL

      I'm, I'm not quite sure. It's a good question. I ... My take, and I think this is, I'm sure, very naïve and, and reductive, um,-

    11. LR

      Mm-hmm.

    12. BL

      ... and I know I ... This is, like, you know, one of my sort of core principles, so I'm sure I also have a tunnel vision on this a little bit, but to, to me, like, uh, o- uh, one of the biggest difference that I see is really around, like, this concept of ownership and, and accountability, whereas in the US, um ... And again, I, I saw it, um ... I'm sure you saw it there maybe, you see it at, like, a lot of companies, not everywhere, but a, a lot of companies will, you know, uh, hire you, give you a big chunk of the business, and it's up to you to, like, you know, prove yourself out, right? Like, you have six months, you have a year, like, you know, it's up to you to, like, show impact. I think the, the, the French employment model, uh, is less, uh, conducive to, like, this type of dynamic, uh, uh, because employment is, like, much more rigid. So, uh, you have much less of this, like, you know, hire now and, like, prove yourself out. Uh, it's much more of, like, prove yourself, like, beforehand and, uh, and if you've made a bad hire, then as a founder, like, you become perhaps, like, a bit cagey about, like, your vision. You want to, like, be more hands-on because you made a bad hire. It's not like someone perfect and, like, they'll kind of make you work, but it means, like, you'll be more hands-on in, like, the work of PMs, uh, you know, daily, and perhaps you'll think like, "Oh, maybe I don't need product managers who won't, like, own my vision. I'll hire project managers," or something like that, right? So it's perhaps, like, slightly more conducive to, like, those, those types of dynamics.

    13. LR

      And you're saying that's in part because it's harder to fire people in France and in Europe?

    14. BL

      Uh, yeah, I think so. And it's not just about firing, I think, to be clear. I just think it's, like, culturally, the market seems, like, a lot less, like, liquid, uh, and dynamic is-

    15. LR

      So people, like, people don't move around as much. They kind of stick around for a long time?

    16. BL

      ... yeah, exactly. Yeah.

    17. LR

      Got it. And it sounds like there's also just, like, a cultural difference of, like, founders innately are much more, "I am in control" and "I'm not gonna hire people and trust you to take this thing o- I am just gonna run the show." Like, it's basically Paul Graham's founder mode is, like, (laughs) already instilled in everyone.

    18. BL

      Maybe, yeah. Maybe, maybe that's a, a little bit. And I think also it's this culture of, like, business, so, like, very business-centric sort of culture, uh, you have. And again, it makes sense, right? Like, the markets, you have less venture capital, you have less, you know, uh, less liquidity in the financial markets as well. And so when you raise funding, uh, you need to have, like, a strong business case. Like, the business case is at the center of your hypothesis. Whereas I think oftentimes in the US you have, again, it's a little bit, um, sort of typical, but it's a very, like, tech or product-centric view of the world, or it can be, uh, you know, a very, like, tech or product-centric view of the world. Like, we will be like, "This product, this is, like, the vision of the product," and sometimes even, like, you know, the business model, they're like, "We'll follow," right? Uh, and, uh, uh, and in France something like the business model, like, has to be, like, front and center, perhaps for you to, like, be able to raise venture capital, for you to be able to, like, even exist, right? So it means, like, it attracts a lot of, like, business, uh, you know, minded, uh, you know, entrepreneurs much more so perhaps than, like, uh, tech-minded or product-minded entrepreneurs.

    19. LR

      Got it. If someone wants to help their company in Europe and France operate more closely to the way companies in the US operate, do you have any advice for them? What do you... I know you me- you talk and work with a lot of companies in Europe. What do you help them change and see differently?

    20. BL

      Yeah. Yeah, it's a great question. I, uh, haven't, like, fully cracked that and think it's, uh, a- it's a really hard question. I'll give you, like, some sort of small pointers, uh, that I have helped at least some of the companies that I've talked to. But, uh, the one is equity. I think there's, like, a desire from a lot of the founders that I've talked to to, like, to give equity, uh, to employees. But because it's not in the culture yet, like, I think employees also have, like, an under-appreciation for, like, equity. Uh, like, well, yeah, it's nice, but, like, uh, I don't know what's gonna happen. Like, I just work for the CEO anyways. Um, there's less of, like, this sense of, again, like, ownership, um, that you can have, you know, like the, uh, in the US. Um, and so I think, like, leaning into that and investing in, like, you know, e- education around equity, uh, it's the case also in the US. I'm convinced, like, you know, 80% of people just don't fully understand, like, their equity. But I think, like, leaning into that, uh, especially in Europe to, like, help understand, uh, help people understand, like, the value of their equity, help them, uh, by, you know, you know, telling more about, like, the story of the business, uh, you know, the trajectory of the business, why it matters for their future equity. I think any- anything along those lines I think can, uh, you know, help, uh, cultivate this, like, greater ownership mindset, I think, for, for people.

    21. LR

      Mm-hmm.

    22. BL

      Um, and then, um, yeah, and then, uh, I think a- another, like, big piece again is, at least to me this is a big recipe to successful product teams, is to, like, develop teams that revolve around, like, this concept of ownership and accountability. Teams that are, like, clearly owning a huge, you know, or it doesn't have to be huge, but, like, a slice of the business. Like, not feature teams like, you know, shipping A/B tests, but teams that, uh, have clear accountability with c- consequences but also, like, clear ownership and, and leeway to do their best, uh, and to, and to thrive.

    23. LR

      Again,

  15. 1:10:30 – 1:16:52

    Building a health advocacy platform

    1. LR

      I usually don't spend time on this sort of thing, but I just think, uh, what you're working on is extremely cool and I think it's gonna be really meaningful to a lot of people. And so I just want to spend a few minutes giving you a chance to talk about what you're working on now. You started a company. Is this your first company, the year you started?

Episode duration: 1:24:02

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